Most of the careful analysis done to date on the Health Maintenance Organization has examined the internal structure and its properties, not the interface between the structure an the consumer population. The imbalance is unfortunate because consumer decisions determine whether HMO enrollments are sufficient to attain the social benefits conferred by the organizational form. The research attempts to redress the imbalance by accomplishing the following: 1) a categorization of the major structural differences facing potential HMO enrollees, 2) a theoretical analysis of the enrollment decision, and 3) an empirical analysis of enrollment by employee groups. The theoretical analysis employs a framework in which the consumer's choice of health care delivery mechanism is assumed to be influenced strongly by transactional considerations. The HMO is viewed thereby as an "internal organization," in which a set financial obligation is exchanged for the promise that services will be available to fulfill the needs of the enrollee. Comparison is made then with the fee-for-service "market" - a series of discrete matchings of treatments and payments. The empirical focus is prompted by the current absence of information on the relationship between financial incentives and HMO enrollment. Such information can be obtained by investigating the enrollment patterns of employee groups, since they frequently face differing insurance benefits and premium requirements. In addition, the employee group is the most generally useful unit of analysis for application to HMO pricing and marketing strategies.